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China’s love affair with online shopping and convenience stores

Nielsen research shows the lure of cheaper goods online is seeing more and more Chinese embrace ecommerce — particularly via smartphones. This trend and the increasing popularity of convenience stores are together eroding the market share of superstores and supermarkets and making them evolve.

The penetration rate of convenience stores and online shopping in China has jumped to 32% and 38% respectively from last year’s 19% and 35%, according to a Nielsen report.

The global performance management company says in terms of sales and penetration, superstores and supermarkets are losing their market share to convenience stores and online platforms, as more and more people, especially the young, prefer to use these two emerging channels, which are more convenient.

According to Nielsen China vice president Rachel Ma, Chinese consumers used to shop mainly at hyper/supermarkets when stocking up on household basics. But fewer do that now, preferring to get what they need at convenience stores or online, she said.

“Generally speaking, consumers are purchasing less at brick and mortar stores – basket sizes have decreased,” she said.

Price increasingly important to online sales

The main factors driving Chinese consumers to choose online shopping are cheaper prices, the ease of price comparison and delivery service.

Indeed, almost seventy percent (68%) of respondents go online shopping when there are sales. And the lure of cheaper goods was cited by nearly two-thirds of those surveyed by Nielsen as the reason they buy things online, up considerably from 42% last year.

And more than half of the respondents — up from just 15% the previous year — said they prefer online shopping platforms because they make it easier to compare prices.

Another 54% of respondents said they shop online because of the delivery service, up from 42% last year.

Nielsen says sales and promotion are still effective ways to also attract consumers and that online shopping platforms have been ramping up their promotional efforts of late. The penetration of shopping festivals is up to 95% and along with the mushrooming of shopping festivals and various kinds of promotions, the price war is among various ecommerce platforms is becoming fiercer.

It also warns that competition is getting fiercer among online shopping platforms due to product homogeneity, requiring companies to differentiate themselves and build competitive advantages.

Convenience makes mobile e-commerce king 

One of the most interesting changes to note is that in the last year, the mobile has overtaken the PC as China’s most popular device for online shopping. According to Nielsen, 81% of online shoppers use smartphones while just 59% use desktops and 57% use laptops. The overriding reason for the popularity of mobile shopping is convenience — 71% consumers say they find mobile devices more convenient than PCs. What’s more, 52% of the respondents said they prefer mobile devices because of the convenience of mobile payments, a rise of 10% year-over-year.

According to the China Electronic Commerce Information Center, the number of Chinese online payment users had reached 416 million by December 2015 — an increase of 112 million, or 36.8% — since the end of 2014. And mobile payment usage also soared last year, with the number of users reaching 358 million, an increase of 64.5%. The percentage of netizens who use mobile payments increased from 39.0% to 57.7%.

Superstores must offer pleasant shopping, attractive promotions

Nielsen research shows the penetration rate of hypermarkets and supermarkets did increase slightly in 2015, by two and one percentage points respectively, to reach 78% and 82%, and the frequency of visits by customers remains stable. However, the average shopping basket value fell from 172.4 RMB in 2014 to 162.7 RMB.

The fact that the sales and penetration growth rates for convenience stores and online shopping are outpacing those of traditional superstores and supermarkets is forcing the latter to transform so as to better meet consumers’ changing needs. They also have to adapt to the fact that the rise of online platforms has helped clue up consumers. These increasingly savvy shoppers are paying closer attention to promotions and how pleasant their shopping experiences are in store. Nielsen says the latter this can be harnessed by such stores to competitive advantage.

Friendly service, a wide selection of products, convenient location, an organised assortment and clean environment are the other factors which most influence superstore and supermarket shoppers.

Underlining the importance of location and brand image, 19% of the respondents said they had visited newly opened hyper/supermarkets in the past six months and convenient location (55%) and a good reputation (46%) are the main reasons they go to a new market.

“Therefore, hyper/supermarkets should focus on promoting brand image, interesting promotional activities to retain customers. In addition to that, opening new stores and exploring online platforms to attract new consumers are also important,” Nielsen said.

JB

Source: http://www.nielsen.com/cn/en/insights/news/2016/Nielsen-convenience-stores-and-online-shopping-become-major-consumption-ways.html

Image: By Mcy jerry at the English language Wikipedia, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=16985897

 

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Walmart’s seamless shopping strategy

Walmart's “seamless shopping” strategy starts with its existing, unparalleled assets – 2.3 million people; more than 11,500 retail locations; e-commerce websites and apps; and a dynamic, optimised supply chain – but also requires new capabilities and fresh thinking.

Customers used to compare Walmart with the store down the street; now they compare it with the best online shopping experience, says CEO Doug McMillon.

“And beyond retail, they compare us with every business they interact with in their lives. They compare our pickup experience to the speed and friendliness of the best drive-through. They compare our checkout process to the ease of paying with an app,” he want on to say.

In an excerpt from the American multinational retail chain’s 2015 annual report, McMillon said retail is not just about putting items on a shelf anymore. “It’s about fighting for our customers, cutting out the hassles and advocating for them on price, too. We’re moving beyond just selling products to being the brand customers rely on to make their lives simpler and more meaningful as they save money.”

McMillon said Walmart’s “seamless shopping” strategy starts with “unparalleled assets that only Walmart has – our 2.3 million people; more than 11,500 retail locations; e-commerce websites and apps; and a dynamic, optimised supply chain. But it also requires new capabilities and fresh thinking.

“This includes new digital tools for customers and frontline associates, as well as back-end software and platform work that benefits the entire enterprise. The use of data, algorithms, advanced forecasting capabilities – and more – is of extreme strategic significance.

“We will put these pieces together in a way no one else can,” he said.

“To help our associates succeed and better serve our customers, we’ve made big changes – including investing approximately $2.7 billion over two years in higher wages, education and training to make Walmart U.S. a better place to work and shop.

“We’re already seeing positive results: our fourth quarter of fiscal 2016 marked six consecutive quarters of positive comps and five straight quarters of positive traffic at Walmart U.S. Everything we’re doing in omnichannel depends on customers having great interactions with us in our stores.”

And the retail giant will strive to be more sustainable, “both in our own operations and in our supply chain,” he said.

“We have three big goals: creating zero waste, running on 100 percent renewable energy and selling products that sustain people and the environment.”